This paper examines how fiscal policy in the euro area reacts to monetary policy, by estimating fiscal policy reaction functions for the period 1999-2019. Inclusion of the monetary policy stance in the fiscal reaction function, approximated by a shadow interest rate, is a relatively novel aspect...

We examine the state dependence of monetary policy transmission and the parameters of the Phillips curve, dynamic IS equation, and Taylor rule across four regimes defined by joint deviations of inflation from the Federal Reserve's target and output from potential. The analysis uncovers important...

This paper investigates how the ECB's monetary policy affects consumers' perceptions about the credibility of the inflation target. Monetary policy is assessed by the gap between the actual policy rate and a Taylor rate to approximate the interest rate expected by the public. Drawing on survey...

Subdued economic activity and low tax revenues, especially during crises, drive borrowing and increase public debt. During these periods, to ease the debt burden, central banks may face pressure to deviate from policy targets. Under fiscal dominance, debt sustainability relies on low interest...

In this paper, we propose a new set of indicators of Central Bank's communication to estimate speech intensity in five different macroeconomic fields: monetary conditions, financial stability, external competitiveness, labour and social conditions and economic activity. In addition, we also...

In this paper, we review the recent economic outlook, policy decisions and communication of the ECB against the backdrop of growing uncertainty. First, inflation heterogeneity has receded with inflation, thus contributing to facilitating the design of monetary policy. Second, monetary easing is...

In this paper, we review the recent economic outlook, policy decisions and communication of the ECB against the backdrop of growing uncertainty. First, inflation heterogeneity has receded with inflation, thus contributing to facilitating the design of monetary policy. Second, monetary easing is...

This paper estimates various Taylor rules for Norway based on the observed money market rate (Nibor). We begin by examining standard Taylor rules from the literature, applying them to Norwegian data to assess their fit. Next, we estimate a benchmark Taylor rule that is included in Norges Bank's...

This study empirically investigates the impact of Inflation Targeting (IT) on nominal interest rates over the past 40 years, focusing on 10 advanced and emerging economies. By using a Binary Regime Model embedded within a Backward-Looking Taylor, our findings confirm that IT adoption has...

How do the President and the Congress affect the policy choices of the Federal Open Market Committee, the primary policymaking arm of the Federal Reserve System (the Fed)? I draw on a commonly used tool for estimating the sensitivity of Fed responses to output and inflation - the Taylor rule -...

This paper extends prior research by introducing a novel econometric framework- Regime-Dependent Granger Causality-to analyse the systematic elements of United States (US) monetary policy. Employing vector autoregressive models allowing for temporary Granger causality, we examine the association...

We study the global dynamics of the fully stochastic nonlinear version of the New Keynesian model and analyze the efficacy of various policies as equilibrium selection tools in this context. First, we unveil a new class of equilibria, characterized by selffulfilled beliefs about output...

The Fed's policy rule shifts during different phases of the business cycle, particularly in relation to monetary easing and tightening phases. This finding is established through a dynamic mixture model, which estimates regime-dependent Taylor-type rules using US quarterly data from 1960 to...

We study the optimal monetary policy problem in a New Keynesian economy with a zero lower bound (ZLB) on the nominal interest rate, when the steady state natural rate (r*) becomes permanently negative. We show that the optimal policy aims to approach gradually a new steady state with positive...

In this paper, different assessments of the ECB's monetary policy stance are reviewed, beyond the mere observation of the sharp rise and subsequent decline of the policy rate. Overall, the monetary policy stance has been more moderate during the tightening cycle than what has been indicated by...

In this paper, different assessments of the ECB's monetary policy stance are reviewed, beyond the mere observation of the sharp rise and subsequent decline of the policy rate. Overall, the monetary policy stance has been more moderate during the tightening cycle than what has been indicated by...

The paper seeks to assess the current monetary policy stance of the European Central Bank (ECB). To do so, it analyses factors driving the inflation dynamics in the euro area (EA) and their potential persistence, drawing comparisons with the inflation drivers and policy response in the United...

The paper seeks to assess the current monetary policy stance of the European Central Bank (ECB). To do so, it analyses factors driving the inflation dynamics in the euro area (EA) and their potential persistence, drawing comparisons with the inflation drivers and policy response in the United...

Persistent exchange rate depreciation and its debilitating effects on rising inflation have remained a concern in Nigeria. This article explores the effects of exchange rate pass-through on producer prices, consumer prices, export prices, import prices and the Taylor rule from 2000 to 2023,...

Recently, several studies have argued about the interactions of the real economy and financial system, as well as the importance of financial cycles in business cycle fluctuations. To date, there exists near consensus among central bankers, economists, and other scholars that the financial cycle...

We consider a two-agent New Keynesian model with savers and hand-to-mouth households with quasi-separable utility functions as introduced by Bilbiie (2020a). This framework allows for separate parameterization of consumption-hours complementarity and income effects on labor supply. We examine...